Tesco Inventory Management Case Study: Systems Thinking Approach

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MGT603: Systems Thinking
Part A: Proposal Individual
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Report
It is the responsibility of an operations manager to make sure that the inventory or stock is
marinated in the organisation so that a regular flow of goods and services can be made to the
customers. If the inventory is not managed in the organisation, and the customers do not get time
utility, they may switch to other substitutes in the market. Tesco is on such a company that is
facing serious inventory management issues, and it is very important to resolve the issues as soon
as possible. Tesco is a retailer of groceries and general merchandise. It is significant for the
management and operations department of Tesco to make sure that the company does not have
over or understock. However, the company is facing issues with high quantities of vegetables
and fruits. It is known that the fresh fruits and vegetables perish in a very short period of time as
their shelf life is shorter than the regular products. Customers prefer to have fruit and vegetables
with short best-before use date to ensure that the products are fresh and do not contain any
addictive. The company reorders the fruits and vegetables in bulk, which and half of them
remains unsold. This leads to perishing of the fruits and vegetables. The resources of the
company are also wasted by this activity. Therefore it is important for the company to reduce the
reorder point from 7 to 4 and it must maintain the safety inventory as 3. There would be a
probability of stock outs if the demand for fruits and vegetables increased. So it is significant for
Tesco to forecast the market demand in an effective manner. There were issues with the
forecasting aspect in the company which increased the reorder levels of the organisation.
The management of the business analyzed the seriousness of the situation and applied the
systems, thinking the approach in the inventory management system of the company. Systems
thinking can be defined as the holistic approach to analyze the interrelatedness of smaller system
constituents in the larger system (Dutta, 2017). System thinking is useful in solving complex
business problems and helps in reinforcing and balancing the systems in the company.
The system thinking approach applied by the company in the inventory management system is
the behaviour over time model (Frank, et. al., 2016).
In this model, the behaviour of individuals analyzed over a period of time to gain information
about the purchasing patterns of the target customers. This makes it easy for the company to
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have a visual presentation of the buying behaviour of the target customers. The company is now
able to have effective forecast of the market demand.
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References
 Dutta, P. (2017). Systems thinking for effective managers : The road less travelled. New
Delhi, India: SAGE Publications India Pvt. (2017). Retrieved July 4, 2019, from:
http://web.a.ebscohost.com.ezproxy.laureate.net.au/ehost/ebookviewer/ebook/
bmxlYmtfXzE1ODY3NDlfX0FO0?sid=52a9c774-72d3-485b-a93b-a2c7c73ee895@sdc-v-
sessmgr02&vid=0&format=EB&rid=1 .
 Frank, M., Shaked, H., & Koral-Kordova, S. (Eds.). (2016). Systems thinking : Foundation,
uses and challenges(Management science: theory and applications). Hauppauge, NewYork:
Nova Science. (2016). Retrieved July 4, 2019, from:
http://web.a.ebscohost.com.ezproxy.laureate.net.au/ehost/ebookviewer/ebook/
bmxlYmtfXzEzNTA2NjhfX0FO0?sid=48c69a3c-ba68-4655-a611-
6e065e85a80b@sessionmgr4008&vid=0&format=EB&rid=1
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